Findings No.1 COA Annual Audit Report 2005

July 28, 2008

1. Cash advances granted to officers, council members and employees for official travels were not yet liquidated within the prescribed period, in violation of COA Circular No. 97-002, thus, resulting to overstatement in income and understatement of expense in the amount of P2,694,349.95 as of December 31, 2005.

One of the facilitative tools in the financial operations of the government is to look into and recognize the system of cash advance. COA Circular No. 97-002 dated February 10, 1997 provide for a more efficient and effective control over the granting, utilization and liquidation of cash advances and that it shall be reported as soon as the purpose for which it was given has been served.

As of December 31, 2005, the balance of the account Due from Officers and Employees was P2,694,349.95 after deducting total liquidations of P823,136.88 or 23.40% from total advances of P3,517,486.83. Of this balance, P1,093,118.85 or 40.57% pertained to current year cash advances, P1,348,964.44 or 50.07% were accounts below 5 years, while P252,266.66 or 9.36% were advances over five years. (Annex 1)

Verification revealed that the City Accountant continued to grant additional cash advances for travel to some officials and employees even if their previous travels were not yet liquidated. She did not adhere strictly to the prescribed rules and regulations in the granting and liquidation of cash advances on travel.

The non-liquidation of this advances within 30 days as prescribed by regulation resulted to overstatement in income and understatement of expense in the amount of P2,694,349.95 as of December 31, 2005.

When this deficiency was presented to management on January 26, 2006, an assurance was given that all concerned officers, council members & employees are informed and shall be directed to immediately liquidate their respective cash advances. The Audit Observation Memorandum was then issued on January 27, 2006 to further document the finding we presented to management relative to the outstanding cash advances (Annex 2) and in response, the Local Chief Executive had a conference with the different department heads in connection with the audit observation and informed the different department heads that all those with outstanding cash advances shall be directed to immediately liquidate and that no additional cash advance shall be granted unless the previous ones are liquidated. (Annex 3)

Recommendation

Require the concerned officers, council members and employees to liquidate their cash advances immediately. The Department Head and the City Accountant shall also make periodic monitoring in the liquidation of cash advances. Further, the City Accountant should refrain from granting additional cash advances if the previous ones are not yet liquidated.

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Written by admin · Filed Under Commission on Audit, Tangub City